What Are The Advantages & Disadvantages Of Investing In The Stock Market?

A wide range of investment avenues are available for investors to grow their savings, such as equities, fixed deposits, Public Provident Funds (PPFs), mutual funds, etc. Stock markets have a history of outperforming returns compared to other alternatives and financial instruments. However, achieving higher returns involves taking additional risks and successful investors have a clear understanding of their risk appetite. While investing in the financial markets has its own benefits, you should also be wary of its pitfalls. 

The stock markets can be very volatile, and even a small event can sway the markets in either direction. An ideal way to manage your risk in the markets is to hold a diversified portfolio that ensures consistent returns from a portion of your stocks, even if some of your holdings underperform or generate muted returns. Investors beginning their journey into the stock market must be aware of its innate volatility before making an investment. Investing in the stock markets requires opening a Demat account along with Trading account. A Demat account is a depository that holds your securities in a digital form. Each security that you purchase gets credited here. Similarly, the securities from your Demat account get debited when you execute sell orders. A trading account facilitates the transaction of financial securities into your Demat account.